Point of View

These columns of ICJ offer an opportunity to the engineering

fraternity to express their views on the current practices in
design, construction and management being followed in the
industry.
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Introspection on professional
performance of contracts

R. Ramakrishnan

The performance by client, contractor and consultant/ aim for an amicable settlement. Disputes could be
engineer in construction projects need introspection settled through negotiation or arbitration innovatively.
for ensuring better professionalism with the aim of Arbitration process should be facilitated timely and the
completion of the project in time, with economy and awards accepted, not challenged. Awards challenged
quality. With respect to quantum and time, quality in the court may take a very long time for justice.
consciousness is vaning. The vision and mission should 'Where there is a will, there is a way' is an apt quote
be, to have fair conditions of a contract, reasonable for projects.
rates, each adhering to the reciprocal responsibilities
and perform professionally. The client, contractor Scope
and engineer should work in mutual cooperation,
There is a surge of activities in construction Industry
coordination and trust as a team.
now. The construction industry is next only to the
In private enterprises, where the private entrepreneur agriculture industry in terms of employment is also
apart from taking all risks has to finance, design, unorganised with many players and employs manpower
construct and maintain, the mind set has to be more of more than 30 million.
facilitative and innovative so that every effort could
be made to resolve the bottlenecks and complete the The scope of the project should be critically examined
project early for yielding the fruits to both employer and from all angles. Depending on the type of project
entrepreneur/contractor. Coordination and cooperation and complexity, consultants could be engaged for
of different government departments may be involved investigations, drafting designs, specifications and
in this process. Leadership skills along with the art engineering. Then prepare the estimates realistically
of managing conflicts accommodatively and ethical keeping in view the escalation for the period and decide
approach should be used in achieving the goal. on the method of funding. Necessary approval from
the environment department and relevant authorities
In case of differences of opinion, every effort should should be obtained in time so that the same does not
be made to appreciate the other person's view and become a deterrent in starting the work.

JULY 2007 The Indian Concrete Journal 29

 Point of VIew

Tendering 1969 have not borne any fruits. The tender conditions
are normally one-sided leaning towards the employer
Type of contract
and not fair. In internationally aided projects, the
Depending upon the nature of work, the type of contract aiding agency insists on adoption of FIDIC (Federation
should be decided. Each has it own advantages and Internationale des Ingenieurs-Conseils / International
disadvantages and has to be dovetailed with the nature Federation of Consulting Engineers) conditions, which
of work and complexity. are relatively balanced. Of late, there is a tendency
in some organisations to adopt conditions similar to
Item rate contract might be simpler to prepare FIDIC.
with key drawings, but in operation it may be
cumbersome as the payment is related to the In fact CIDC (Construction Industry Development
quantum of work done, involving a large number Council), the apex trade body for the construction
volumes of measurements in big projects. industry and sponsored by the Planning Commission,
has brought out new model tender conditions for
Lump sum contract can be resorted to when adoption. It is hoped that at least in the future, we
detailed drawings and specifications can be shall have uniform tender conditions that is fair to both
prepared with payment stages, as well as parties.
variations. Variations during site execution should
cause no surprise and should be expected. Interest for delay in payments
It is high time that the tender conditions contain shorter
Cost plus contract is entered into when the
period for payment of bills after submission by the
scope is undecided and is open ended such as in
contractor or else interest liability should be included.
research projects. Clear understanding regarding
After all the contractor is in a commercial transaction
scope and time is essential.
with profit motive and without periodical payment of
dues, the progress of work suffers causing delay and
Turnkey contract can be resorted for complex
escalation. FIDIC provides for this, but everybody is
projects where different special items/services are
afraid to include the clause, as it is an avoidable cost and
taken up by the main contractor either by himself
the onus of taking responsibility comes in.
or as a joint venture for design, drawing, execution,
testing etc. The investigation responsibilities and
variations has to be made foolproof so that the Time period
scope of disputes is minimised. This is easily said Adequate time period should be provided for execution,
than done and hence the need for minuteness keeping in view the monsoons, site availability for doing
in investigation, detailing, design and scope the work, utility shifting by other departments/agents,
requirements. etc. This should be further related the to the requisite
equipment/labour and methodology of work. In a
B.O.T. privatisation type of contract is used civil engineering contract time is of the essence of the
when the funds are limited or not available contract, but has no meaning, with so many bottlenecks
but the development is essential. In this case, and breaches affecting the time schedule. The penalty for
major responsibilities of designing, financing, delay should be reasonable and not abnormal.
construction and maintenance is shifted to
the entrepreneur, with suitable provision for Bonus
recouping the cost of financing and making profit
Every contract contains a clause for levy of penalty
in the form of toll or other income.
for delay. Similar clause is hardly found for payment
of bonus or incentive for early completion. This will
Balanced tender conditions infuse some motivation to complete early and moreover
The Contract Act is more than 100 years old and the asset is available early for use with less escalation.
has not been updated. Even after nearly 60 years of Though traditionally Indian contracts are not completed
independence, there are no uniform tender conditions in time, introduction of bonus clause for flyovers in
even amongst state or central government, leave alone Mumbai, N.H.A.I. road development works, etc. have
public sector and private firms. The efforts of the resulted in early completion of the projects. FIDIC
Planning Commission to bring out a modal contract in contract has provisions for bonus clause.

30 The Indian Concrete Journal JULY 2007

 Point of View

Escalation World Bank, etc. do not permit negotiation or even

Escalation should be provided with contract. Rates of re-invitation. In case there is no scope for reduction
POL (petroleum, oil and lubricants), cement, steel, etc especially for special works or projects in remote areas,
keep varying and hence compensation is needed and one should not hesitate to accept the lowest applicant
hence compensation is needed to avoid speculation in after approval. Re-tendering should be the last resort as
tender. Restriction of escalation to the original period of further increase in cost is not surprising. Hence critical
construction and not to the extended period is another judgement of the tender in terms of complexity and
practice which needs to be changed. competitiveness is needed. The applicant should quote
reasonably for professional performance as quoting low
Pre-bid meeting to grab the job and later do bad quality work or make
hefty claims to bridge the expected losses is unethical
In case of big projects and complex works, pre-tender
and unprofessional.
meeting should be conducted for briefing about the
project, appreciate the views of prospective applicants, Quoting high, forming groups or cartels are unethical
and amend the tender conditions accordingly. practices that should be eschewed. Nevertheless,
tendering is an exercise like gambling with heavy risks
The applicants should make use of the opportunity to
and nobody knows who will get the work. In case a
put forth their viewpoints after thorough study of terms
contractor does not have sufficient work with him, but
and site conditions/deficiencies. Adequate time should
possess adequate equipment and manpower, he may
be provided after issue of tenders for the applicants to go
at times quote less for least profit so that his resources
through the tenders, visit the site and communicate their
are actively engaged. At times rivalry and politics also
views. At times the applicant do not use this opportunity
lead to low quotes.
and complain afterwards about the one sided terms and
conditions. Sometimes the client does not give sufficient The tender should be accepted only when the work can
time after issue of tenders and conducts the pre-bid commence without any delay or breaks. In case the land
meeting just for a formality and declare that tender itself is not acquired or site is not ready for commencing
provisions shall prevail. This is not right. the work, issuing work order has no meaning. Since it
would invite disputes at the inception stage itself. In
Pre-qualification such cases, the work order can be issued for mobilising
In high cost works/complex works/special types resources but commencement of work could be done at
of works, it is always preferable to pre-qualify the a later date specifically agreed upon.
applicant. This could be in the form of two cover system
to save time and would ensure that the client gets Work management
financially and technically qualified suitable contractor
for the type of work in question. Improper assessment Aim
or rejection of tender may lead to legal tangles which The trinity in the contract, the 3Cs clients, contractor
should be avoided at all cost. and consultant/engineer should perform their role
professionally with quality and in time by pooling
Bidding and acceptance their resources effectively. Breaches by any of the
Sufficient time should be provided for bidding after the parties would cause under utilisation, idle equipment
pre-bid and issue of amendments. There are cases where and manpower leading to delay in work, which
the construction period is one year and the validity of means additional cost. Hence concerted, coordinated
tender is 4 or 6 months which is too long. The tender and cooperative professional approach is needed in
acceptance should not be lingered long and should completing the project. The project leaders of the client,
be within a reasonable time. If there is no provision contractor and engineer should enthusiastically mobilise
for escalation, the profit margin gets reduced for the their technical, commercial and managerial skills in this
contractor. In case of high value tenders, detailing respect.
submitted by the lowest applicant should be studied in
more detail apart from the cost estimates. The practice Contractual relations
of negotiating with other than the lowest applicant Contractual relations are basically human relations
is unethical. Negotiations with applicants should be with legal obligations and responsibilities. The contract
conducted by a committee to maintain transparency creates an association between interested parties who
and the members should have good negotiations skills. have different functions but with the common goal

JULY 2007 The Indian Concrete Journal 31

 Point of VIew

of completing the project. The parties in a contract mobilisation of material, men and equipment. Periodical
therefore are not competitors in any way, but rather progress reports should be submitted by the contractor/
joint partners contributing their separate talents and consultant. Periodical reviews be it weekly/monthly/
efforts to produce the outcome agreed in the contract. In quarterly should be proactively made at different levels,
spite of this accepted premise, conflicts do arise. Many to assess the progress achieved with respect to the
of them can be traced to personal differences, desire planned schedule. This would help in taking remedial
for credit or one-upmanship regardless of what might action in case of lag. Pragmatic approach with empathy
be good judgment and acceptable conduct. The most would help to motivate all parties and lead to progress
effective and simplistic approach is the observance of even with odds. Methods that would enable to make up
good business ethics by all the parties concerned. the loss of time should be ascertained and resorted to
compensate/avert the delays anticipated/accrued.
The elements of satisfactory contractual relations are
dependent basically upon the following characteristics Cooperative discussion rather than authoritative
and qualities that should apply to the parties of the direction would ensure better results and relations. If
contract. there are some costs involved in accelerating the work,
the decision to incur the cost or accept the delay should
Good reputation be deliberated and decided. Quality should not be
sacrificed for the sake of quantity and time. Quality and
Financial capability
time consciousness should be inculcated especially with
Proven competence respect to men, machinery and material.

Managerial ability Coordination, determination, commitment, innovation

and empathy, all of these can play a great role in such
Organising ability exigencies. Thus, the tendency should be to work like
a joint venture of 3Cs to achieve the goal rather than
Technical knowledge blaming each other for the delays and cost. Attitudinal
and mindset changes for ethical and professional
Flexibility performance is essential which can pave way for
remarkable results.
Initiative

Satisfactory performance Role of the client

The client should perform his role as enshrined in the
Professional approach contract to enable performance by the contractor.

Good contractual relations and business ethics normally For example:

start with these and must be maintained throughout the Ensure proper soil investigation to avoid radical
periods of initial bidding, negotiation, execution, and change in foundation.
settlement of disputes, if any. In other words it shall be
for the whole period from tender stage to settlement of Ensure land is acquired and is without and
final accounts including maintenance. encumbrances.
Since all the events that can transpire during the course Ensure that environment and all the other
of execution of a contract cannot be foreseen or planned, necessary approvals are obtained before the start
it follows that no universal formula can be offered to of work.
forestall their occurrence. Hence, the best thing is to be
aware of the pitfalls and follow good practices. There Ensure permission for tree cutting.
is no substitute for good business ethics and mutual
trust. Ensure that the utilities are removed enabling the
progress of work.
Mission
Achievement of the set goal can be accomplished Hand over the site to commence the work, in full
by formulating an acceptable programme for the or parts, as per the contract.

32 The Indian Concrete Journal JULY 2007

 Point of View

Give water supply/electricity supply at the Peculiar causes

requisite location in the desired quantity for the Non performance of client's responsibilities would
work. cause additional time and cost to the contractor which
in turn may have to be borne by the clients only. Many
Make available the detailed drawings and clients do not adhere to their commitments, but shift
specifications for advance planning and execution their responsibilities or dilly dally in taking a firm
so that the work does not suffer for want of the decision. Risks may be involved in taking decision in
same. one case which may have wider implication in some
other case. This is true especially with respect to costs.
Ensure proper approval from relevant government Fear of technical examination or audit is another aspect
departments/agencies so that there are no work- which deter decisions. These are some intricacies for
stoppages. introspection. It is high time the legacy of distrust
is flushed out a policy of trust and professional
Changes in drawings during execution should be responsibility should be induced upon. This may be a
minimum if it cannot be avoided. tall order but nonetheless it should be attempted by all
parties concerned.
Avoid suspension of works as the same cause
disruption of labour, dislocation of plant and
machinery leading to time an cost overruns.
Role of contractor
The contractor should know his strength and weakness,
Ensure approval of changes, sub-contracting firms and professional capacity to manage and execute the
and materials. project before bidding for the work. He should form
suitable joint ventures, appoint capable men and
The bill duly certified by the engineer/consultant procure the needed machinery to ensure that he is
should be paid within the time period specified able to professionally perform the tasks. He should
in the contract. quote a reasonable price after proper site inspections
understanding the scope and complexity of the work.
In case the consultant does not certify the bills Once the contract is accepted he should take up the job
prepared by the contractor, probe and remove with commitment and dedication. He should :
the bottleneck so that the contractor is paid for
the work done lest he may not progress for want Mobilise adequate men, machinery and able
of cash flow. managerial and supervisory personnel.

Formulate the work programme in consultation

Ensure that the consultant cooperates to ensure
with the consultant and client to complete the
progress of work.
project within time.
The decision on drawings, designs, rates for new
Identify and take approval from the consultant/
items, etc. should be promptly taken.
client for the materials required periodically.
Consider the inevitable extension of time, and Prepare quality assurance manuals, appoint
disputes as per the provisions of contract and in quality control personnel and ensure quality
spirit of natural justice. works as per the specifications and standards.
Perform quality assurance tests and maintain
Consider the disputes with an intention to solve records of the same.
rather than drag on.
Monitor progress of the work diligently.
Cooperate to proceed for arbitration of unresolved
disputes by appointing the arbitrator and be part Participate in the progress review meetings and
of the proceedings. take action to overcome shortfalls by addition of
labour/equipment.
Avoid challenging the arbitral awards and try to
negotiate a settlement, as the courts take longer Periodically submit the bills as required, enabling
time. certification and payment.

JULY 2007 The Indian Concrete Journal 33

 Point of VIew

Whenever changes, variations or hindrances are Conduct progress review meetings periodically
involved, bring out the facts promptly and furnish to identify bottlenecks and suggest alternative
details of cost and new rates. measures so as to adhere to the schedule.

Provide details as required by the engineer to Examine in detail the extension requirement
determine the extension of time as well as the caused due to the fault of the client/engineer/
cost. contractor and approve the same.

Appreciate and cooperate with the engineer and Avoid and reduce variations/changes in design
client to ensure that the dispute/claims are sorted during execution as the same causes work
out amicably in spirit of give and take. disruption and delay.
In case the disputes are referred to arbitration, Clarify ambiguities in drawings/specifications/
cooperate with the client and arbitrator in arbitral BOQ (bill of quantities).
proceedings/conciliation proceedings to settle the
issue amicably. Assess correctly the claims/variations and certify
the same in coordination with the contractor and
Do not make false or hefty claims.
employer.
Cooperate with the consultant to enable decision
on claims. When a decision under dispute resolution clause
is sought, the decision should be given promptly
Do not challenge the arbitral award, if it was not as a quasi arbitrator after detailed examination of
favorable. Awards challenged in the court take the full facts, in accordance with the contract and
lot of time, even decades, for justice. circumstances of the case. He may also coordinate
discussions between the parties for a quick
Mutual cooperation rather than confrontation, decision but he should not get influenced by the
flexibility rather than rigidity, trust and faith, client or contractor while giving his decision.
should be the golden ethos, for ethical and
professional performance. Cooperate, coordinate and act in a fair manner
to gain the confidence of both client and the
It should also be noted that goodwill earned will contractor.
lead to a lasting bond and mutual appreciation.
In other words, the consultant/engineer functions as a
catalyst and facilitator in the whole exercise of contract
Role of engineer management. He is a bridge between the client and
The engineer could be an employee/consultant of contractor, enabling proper and adequate performance.
the client or a separate consultant employed for the Hence, he plays a very crucial role in the success or failure
purpose. The engineer should perform duties diligently of a contract/project. Unprofessional behaviour can put
with technical soundness and contractual fairness in the project in jeopardy causing financial burden either
coordination with the client and contractor such that the to the client or contractor unnecessarily. Introduction
progress of work is facilitated. He should of a new consultant in the middle of the project phase
does create problems. Hence, there is a need to select
Give drawings/designs for execution in advance at the outset consultant who is properly qualified and
for planning the procurement of materials and experienced for the work. These are a few pointers for
men for project execution. the client and consultant to appreciate and abide.

Approve the materials promptly after he is Quality consciousness

satisfied. There is a need to adopt and follow the requisite quality
standards and requirements. There are many century
Facilitate quality work with adequate
old structures in India which are still strong and against
personnel.
this background, there are many recent structures which
have failed. Many show signs of weakness within a
Certify the bills promptly enabling payments for
decade and then resort to rehabilitation. Due to massive
main works and escalation.

34 The Indian Concrete Journal JULY 2007

 Point of View

quantum of work and the high speed of execution, thus ensure success of the scheme. In such projects, the
quality requirements, have been overlooked. There may art of managing loss or profit gains more importance
be records to prove that everything is done perfectly as the entrepreneur has taken up the work with profit
well. But, the reality is different. It is hence essential motive. Central government and planning commission
that professional commitment in maintaining requisite are trying to address these critical issues in their model
quality should be in adhered to by the contractor, concession agreements. But, amicable solutions are still
consultant and client. not easy to achieve.

Privatisation contracts Take it or leave it approach would dampen the whole

spirit and vision of the concept of PPP. Flexibility rather
India is a vast country that needs large developments.
than rigidity should be the guiding principle. The
In view of the shortage of government funds for
objective should be to find ways and means of solving
development, many infrastructural projects are being
the problems/disputes in a Win-Win direction. Apart
developed under Public-Private Partnership (PPP).
from technical and financial expertise, coordination,
Many road works/port works are classic examples.
negotiation, managerial skills and professional ethics
In non-viable projects, the government provides some
can alone ensure success.
subsidy also. The cost of project and profit are permitted
to be earned through tolls, handling of cargo, etc. The
Mr. R. Ramakrishnan, Msc (civil engg.), has
period of permit varies from 20 to 30 years depending served in several organisations including MES,
upon the contract. Projection of traffic for such long years BEML, MOST, Gammon India Ltd. He retired as
(more than 5 years) is quite risky as the same depends additional chief engineer of JNPT. Presently, he is
working as general manager (projects)/project
upon various factors. Hence, there are some successful
advisor at Atlanta Infrastructure Ltd.
projects and some problematic projects as well.

We are still in the learning curve. The failures of

Mexican and Malaysian highway projects are not yet
fully grasped. In all these neo-projects, the contract
conditions have to be fair and even. The present scenario
needs introspection. Detailed Project Reports (DPR) are
not given with the tender and if it is provided, it has
lot of deficiencies. As the responsibility is put on the
contractor, the client or consultant do not take intrinsic
interest to provide the required inputs and analysis to
make the DPR complete, useful and reasonably correct
and informative for proper understanding of the
project enabling the entrepreneur to analyse and quote
accordingly. It is just not possible for the entrepreneur
to do all the surveys and investigations within the short
duration of tender to analyse the scope of work critically
and estimate the cost of work. Hence, he has to rely solely
upon the documentation provided along with the tender
which typically lacks a lot of critical information.

The responsibility of getting the various approvals,

environmental clearance, shifting of utilities, land
acquisition, etc. are dumped on the entrepreneur,
which consume a lot of his time and thus reduce the
time available to complete the construction. In short,
pre-planning for execution of projects is quite deficient
and needs to be improved.

The people handling PPP projects have to be impartial

reasonable and responsive with innovative ideas to sort
out the problems with empathy and pragmatism, and

JULY 2007 The Indian Concrete Journal 35